Libor Prompts Labour Party to Demand Economic-Crime Law

The U.K.’s opposition Labour Party
demanded the introduction of a new economic-crime law to help
prevent future financial scandals such as the manipulation of
the Libor benchmark.

The party’s home-affairs spokeswoman, Yvette Cooper, told
the party’s annual conference in Manchester, northern England,
today that the law would provide clarity for the police and
prosecutors and determine which agencies should tackle financial
fraud.

“Look at the Libor scandal that emerged this summer,”
Cooper said. “It is a multibillion-pound fraud. People were
fiddling figures to get rich, while small businesses paid the
price. Yet no one has been arrested.”

Financial Services Authority Managing Director Martin Wheatley called last week for oversight of the London interbank
offered rate to be handed to the U.K.’s financial regulator
under proposals designed to revive confidence in the tarnished
benchmark.

Wheatley carried out a review at the request of Chancellor
of the Exchequer George Osborne after Barclays Plc (BARC), Britain’s
second-biggest lender, paid a record 290 million-pound ($468
million) fine in June for manipulating Libor, which is managed
by the British Bankers’ Association and used to set rates for
more than $300 trillion of securities.

‘Completely failed’

“Governance of Libor has completely failed,” Wheatley
said. “This problem has been exacerbated by a lack of
regulation and a comprehensive mechanism to punish those who
manipulate the system.”

At least a dozen banks are being probed by regulators
worldwide over allegations they colluded to manipulate the
benchmark to profit from bets on derivatives. The U.K. Serious
Fraud Office opened a criminal case in July. U.S. investigators
conducting a criminal have asked their British counterparts for
permission to interview London traders, two people familiar with
the investigation said.

“In the U.S. they have seen 800 prosecutions for serious
fraud since last year,” Cooper said. “Here in the U.K., where
the Serious Fraud Office budget has been cut by 25 percent, they
have pursued only 20. If you don’t pay your TV license, you’ll
end up in court. But defraud millions of pensioners or small
businesses and you can get off scot-free.”

The Liberal Democrats, Prime Minister David Cameron’s
coalition partners, attacked Labour, accusing it of double
standards over its attitude to the finance industry during 13
years in power to 2010.

The Liberal Democrats issued a poster showing Labour leader
Ed Miliband as a poodle on a leash held by a banker, with the
slogan “Labour: 13 years as the bankers’ lapdog. Two years
trying to hide it.”